Tokens

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The use of the utility token is in the name. It is used strictly on the network it was created on. It does not hold any real value and is only worth its speculation value. To understand what speculation value is, think of an NFT, which is a form of a utility token. These normally have a limited amount and don’t hold any real value except what people want to pay for them. Some projects use them to raise funds for their projects. Some exchanges do this so that if you own a certain percentage of their utility tokens, you can get a discount on trading. These tokens normally have a set number that will be minted and is not minable.

One of the most common types of tokens is the security token, which holds some value. Think of it like stocks in a company. You will evaluate the company or crypto project for its value. Then divide that number by how many shares or tokens you want to have, and this will give you the value of the security token. This way, when you have a security token, it represents a certain percentage of the project it is associated with. Also, with security tokens, you can treat them as a utility token somewhat. An example would be that you would have to stake a certain amount of a project's security tokens to receive bonus tokens when your staking rewards were given.

When doing anything on the blockchain, it has a cost to reward those supporting it. These tokens are your payment tokens. For people who do interact with a blockchain, it is used to pay gas fees when using any of the applications. They have value the same way a security token has value for its project. An example would be ETH to Ethereum and AVAX to Avalanche. If these tokens are on a POS blockchain, it is also possible to stake them to gain rewards for helping secure the blockchain.

Just as the name sugest these coins are ment to be stable. The vast majority are pegged to the US dollar, meaning they will always be worth a dollar. This gives people an avenue to hold funds in reserve on the blockchain. Since bringing funds onto the chain from fiat is not always quick you can keep funds on standby for a buying opportunity.  Also if you feel the market is going to take a dip you can use stablecoins as a way to take a profit. Again since onboarding and offloading fiat to the blockchain can be slow and costly this is a great place to hold your funds until the market stability is more to your liking.